Magnum Towing & Recovery, LLC v. City of Toledo
| Decision Date | 09 May 2006 |
| Docket Number | No. 3:04CV7671.,3:04CV7671. |
| Citation | 430 F.Supp.2d 689 |
| Parties | MAGNUM TOWING & RECOVERY, LLC, et al., Plaintiffs, v. CITY OF TOLEDO, et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
Timothy A. Magee, Bowling Green, OH, for Plaintiffs.
Samuel J. Nugent, James G. Burkhardt, City of Toledo, Department of Law, Toledo, OH, for Defendants.
This is a suit by a towing company against the City of Toledo. Plaintiff Magnum Towing and Recovery (Magnum) is a tower licensed to perform police-ordered tows of inoperable or abandoned cars within the city limits of Toledo.
Magnum claims the City's procedures for police-ordered tows violate federal and state law. Magnum alleges City officials deprived it of property interests without due process. Magnum also facially challenges specific Toledo Municipal Code provisions under the Due Process Clause and Ohio preemption doctrines.
Jurisdiction exists under 28 U.S.C. § 1331.
Pending are Magnum's motion for partial summary judgment and the City's motion to dismiss. For the reasons that follow, Magnum's motion shall be denied and the City's motion shall be granted in part and denied in part.
Magnum is a towing company located on South Avenue in Toledo. Magnum, which is owned by Anna Petrey, has a City license to perform non-consensual tows for the Toledo Police Department.
This case challenges City regulations governing how and when a tow operator can receive—or lose—a license to do police-ordered, non-consensual tows for the City. Magnum also challenges the City's ability to change its regulations with regard to such details as the fees paid to towers for such tows.1 Police can order an unattended vehicle's removal: 1) if it obstructs traffic, 2) if it is wrecked and inoperable; or 3) in other circumstances specified by City's Code. T.M.C. § 308.08. Police arrange for removal by contacting the next Class A tower on the Police Department's rotating tow list in the same district as the vehicle. T.M.C. § 765.07.
The parties have a history of legal feuding. In 1998, Petrey sued the City because officials kept Magnum off the list of towers allowed to perform non-consensual tows. Whereas in this complaint Petrey. claims state law preempts Toledo towing regulations, in her 1998 lawsuit she claimed federal law preempted local towing regulations. I agreed and granted summary judgment for Magnum. Petrey v. City of Toledo, 2000 WL 246446 (N.D.Ohio). City officials then placed Magnum on the list of towers eligible to perform non-consensual tows.
The City appealed my summary judgment decision, and the Sixth Circuit affirmed in part and reversed in part. Petrey v. Toledo, 246 F.3d 548 (2001). On remand, the parties entered into a settlement agreement in August, 2002.
At the time of Petrey's original litigation with the City, she her operation was located on Wamba Street in Toledo. Around the time of the settlement, she was relocating to her present South Avenue location. In the settlement, the City, in addition to paying Petrey about $10,000, agreed to permit Magnum to continue performing tows on the condition that Toledo City Council approve a special-use permit.
When Magnum first began operations at the South Avenue location, the premises did not conform to various Code requirements. Magnum alleges that the City agreed to allow it to operate despite such non-compliance.
Things have not gone smoothly for the City and Magnum since they entered into the settlement agreement. Magnum alleges the City has not honored the settlement agreement and engaged in unfair and retaliatory actions against Magnum.
Magnum asserts that the City, after initially allowing it to use the South Avenue location, revoked its police tow license due to the location's failure to meet Code requirements. Revocation, according to Magnum, was improper because the City: 1) had agreed to let Magnum operate despite non-compliance with certain Code requirements; and 2) excessively delayed in providing sewer and water services to the South Avenue facility. Magnum claims City officials stated the license revocation was not appealable.
Another dispute arose over payment of remittance fees to the City. At various times from 2003 to 2005, Toledo City Council approved changes to sections of Chapter 765 of the Toledo Municipal Code regulating police-ordered tows. After November, 2003, towers could charge $85 for a typical toW and $12 daily for storage, with $10 of the $85 tow fee to be remitted to the City to cover administrative costs. T.M.C. §§ 765.12, 765.13. Thus, the end result for towers is an increase of five dollars from the sum they previously received, but towers are now required to remit $10 to the City.
The City requires towers to pay the remittance fees quarterly. The City suspended Magnum's license when it did not receive a quarterly payment from Magnum. Magnum insists it mailed the check and the City intentionally misplaced Magnum's payment. The City contends the ensuing license suspension was automatic following failure to receive payment from Magnum. It also contends, moreover, that the suspension was not appealable. The City lifted the suspension two weeks later after receiving a check from Magnum.
On January 31, 2005, Magnum accused the City of engaging in a pattern of retaliatory removals from the tow list and brought a motion before this Court to enforce the settlement agreement. Magnum's motion was denied because the language of that agreement did not state that this Court would retain continuing jurisdiction over the parties after dismissal of the case. Case No. 03:98CV7188 (Doc. 83).
The City states the two incidents in which Magnum was removed from the tow rotation list (first for failing to meet City Code requirements, then for failing to pay required fees), happened automatically on the occurrence or non-occurrence of required events, such as the payment of quarterly fees. Under the City's view, procedural due process was not required: the City uniformly removes from its list any tow operator who fails to pay required fees or meet Code requirements. Likewise, the City automatically reinstates tow operators when the City receives payment for fees or tow operators otherwise become compliant with city Code.
Magnum raises additional challenges to the City's relationship to and regulation of towers.
The disputes leading to this litigation arise in the context of changes in the City's overall relationship with police-tow licensees and the regulations governing that relationship.
Before September, 2005, a tower was responsible for taking the vehicle subject to a police-ordered tow to an approved storage facility for safekeeping. T.M.C. §§ 765.15, 765.17. Typically, the tower took the vehicle to its own lot, thereby earning storage fees. Before November, 2003, towers could charge up to $70 for a police ordered tow.
In November, 2003, Toledo City Council changed the percentage of revenue sharing from the proceeds from the auction of abandoned vehicles stemming from police ordered tows. Before November, 2003, 80% of the auction proceeds went toward the tower's bill (to cover the cost of storage and towing), while 20% went to the City. After November 25, 2003, the City received 60% of the proceeds and the towers received 40%. Magnum alleges the City applied the new revenue-sharing formula retroactively.
Additionally, in September, 2005, the City opened its own lot to store policeordered tows. This caused Magnum to lose revenue in two ways. First, police began uniformly directing towers to bring police-ordered tows to the City lot, thereby denying towers the opportunity to earn storage fees. Second, the City reimbursed towers $55 for towing vehicles to the Cityowned lot, instead of the $85 (minus the $10 remittance) towers previously received for police-ordered tows.
The City's stated goals in opening its own storage lot were to eliminate the expense of inspecting private tow storage facilities and generate storage fee revenue.
Magnum also contends the City has refused to pay for towing inoperable vehicles to the auction sites. The City states it never paid for tows to auction sites because towers were—and are—reimbursed with a portion of the auction proceeds.
Magnum's first amended complaint has ten counts. The second through fifth counts raise issues of federal law; the other counts raise issues of state law.
Magnum's federal claims are that the City violated the Due Process Clause of the United States Constitution by: 1) twice revoking or suspending Magnum's license to perform police-ordered tows; 2) retroactive reduction in both the rate the City paid Magnum for already-completed tows and the revenue sharing percentages for auctioned vehicles; 3) the City's failure to pay for tows to auction sites; 4) implementation of the $10 remittance from the $85 towing fee;2 5) opening the Cityowned tow lot; and 6) prospectively altering the rates for police tows and percentage split of the profits from auctions.
Magnum's state law claims allege: 1) the City's ordinances regulating police-ordered tows are pre-empted by Ohio statutes governing towing services; 2) breach of contract; 3) unjust enrichment due to the City's refusal to pay for secondary tows to auction sites and the City taking a portion of proceeds of the sale of auction vehicles; 4) wrongful prosecution; 5) abuse of process; 6) intentional interference with business relations; and 7) breach of the 2002 settlement agreement.
In seeking dismissal of plaintiff's complaint, the City asserts that Magnum still has a towing license that permits Magnum to participate in the rotation list on the same basis as other licensed towers for police ordered tows. The City further states it is not seeking to revoke Magnum's license.
Magnum seeks partial summary judgment as to its due process claims.
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